In the context of the substantial increase in A-share positions of northbound funds exceeding 70 billion yuan since June, the shareholding ratio of foreign investors in individual stocks has also risen.
According to the latest data disclosed by the exchange, as of June 27, 3 stocks, China Test, Glodon, and Oriental Yuhong have exceeded the 28% suspension of foreign investment.In addition, there are 12 stocks in the Shanghai and Shenzhen stock exchanges where the foreign shareholding ratio exceeds the warning point of 24%.
The latest data disclosed by the Shenzhen Stock Exchange shows that as of June 27, QFII/RQFII/Shenzhen Stock Connect investors’ shareholding ratios (accounting for the company’s total share capital) in China Test, Glodon, and Oriental Yuhong respectively reached 28.76%, 28.28%, and 28.14%, which have exceeded the 28% suspension of foreign investment.
In addition, the shareholding ratio of QFII/RQFII/Shenzhen Stock Connect investors of China Ceramic Materials, Pioneer Intelligence, and Estun all exceeds 27%, which is close to the 28% suspension of foreign investment.
In addition, according to the information of the Shanghai Stock Exchange, as of June 27, the number of A shares of Proya held by QFII/RQFII/Shanghai Stock Connect/UK Cross-border Conversion Agency/Global Depositary Receipt Depositary was 73.9114 million shares, accounting for 73.9114 million shares of the company's total. 26.26% of the share capital; the foreign shareholding ratio of Hongfa shares reached 24.35%, exceeding the warning point.
According to relevant regulations, when the total shareholding ratio of foreign investors in an A-share reaches 28% or more, the Shanghai Stock Exchange or Shenzhen Stock Exchange will notify the Hong Kong Stock Exchange, and the Hong Kong Stock Exchange will suspend relevant purchases as soon as practicable. until the Shanghai Stock Exchange or Shenzhen Stock Exchange said that foreign ownership fell below 26%.
At present, there are 3 nodes of foreign shareholding ratio that attract investors' attention, namely 24% (warning point), 28% (buying suspension point) and 30% (mandatory reduction point).In terms of specific implementation, after the foreign shareholding ratio exceeds 24%, the exchange will announce the latest shareholding situation on the next trading day until the shareholding falls below this ratio; when the foreign shareholding ratio exceeds 28%, the Shanghai and Shenzhen The Stock Connect channel will suspend buying and only sell until the shareholding ratio drops below 26%. At this time, foreign investors can continue to buy through the account of the Shanghai and Shenzhen Stock Exchanges; if the foreign shareholding ratio exceeds 30%, all foreign capital The buy channel is closed, only sell.The excess part shall be sold according to the principle of buy later, until the shareholding ratio is within 30%.
Prior to this, there have been several cases of A-shares purchased by foreign investors reaching the 28% suspension purchase point or above, including Gree Electric, Shanghai Airport, Midea Group, Han's Laser, and China Testing and Testing.Judging from past cases, the foreign shareholding ratio exceeding the suspension buying point does not necessarily mean a sharp rise, or a sharp fall caused by the departure of profitable funds, and the trend of individual stocks will eventually return to the company's fundamentals.
Moreover, after a large-scale scavenging of goods, so that the shareholding ratio is close to the buying limit, it means that foreign capital lacks further buying space, and may also lead to adjustments of some index targets or weights.
For example, in 2019, the proportion of foreign-owned Han’s Laser and Midea Group was once close to the buying limit, and MSCI soon adjusted its relevant index targets.For another example, in December 2020, MSCI announced that Gree Electric will be removed from the MSCI standard index and large-cap series.At that time, QFII/RQFII/Shenzhen Stock Connect investors held 28.07% of Gree Electric's A shares.Gree Electric did not return to the flagship index in the quarterly adjustment until February of this year after the MSCI index was adjusted.
Recently, as the A-share market has rebounded significantly and northbound funds have entered the market, many foreign institutions have clearly expressed their optimism about China and overweight A-shares.
UBS Wealth Management said that despite the sharp increase in the risk of a global economic recession, China's policy focus has shifted to normalizing supervision and supporting the healthy development of the platform economy.Continue to be optimistic about the performance of the Asian market represented by China. It is expected that the profit growth of the Asian market this year is still expected to reach 4.8%.
Wang Ying, chief China equity strategist at Morgan Stanley, still remains optimistic about the overall performance of A-shares in the market outlook for the second half of the year, suggesting that global investors should focus on A-shares in the allocation of emerging market equity asset portfolios.
Wang Ying said that the above judgment is mainly based on two reasons: First, in the environment where the steady growth policy continues to exert force, the response of the A-share market is often more positive and positive, and the sensitivity to stimulus policies will be higher than that of the offshore market. The second is the distribution of medium and long-term structural opportunities. A shares are more concentrated in industries supported by national policies such as information technology, high-end manufacturing, and green environmental protection.In addition, the recently announced new personal pension investment policy will also increase the participation of A-share institutional investors in the long run.
